LIFO and Income Taxes Refer to Practice 99 Assume that the c

LIFO and Income Taxes Refer to Practice 9-9. Assume that the company has no expenses except for cost of goods sold, the se price per unit is $6 in each year, and tha taxes owed for Year 1 through Year 4 (2) the company uses FIFp inventory valuation. ractike 9-11 t the income tax rate is 40%. Compute the total amount of income assuming that (1) the company uses LIFO inventory valuation and

Solution

WN - Closing Units = Opening Unit + Unit Purchased - Unit Sold

Calculation of Amount of Income tax owed under LIFO inventory Valuation

Calculation of Amount of Income tax owed under FIFO inventory Valuation

WN - Cost of Goods Sold = Purchase Amount + Opening Stock - Closing Stock

LIFO Perpetual
Year	Purchase	Sales	Balance
Units	Unit Cost in $	Purchase Cost in $	Units	Unit Cost in $	Cost of Sales in $	Units	Unit Cost in $	Inventory Cost in $
1	50	2.50	125.00	40	2.50	100.00	10	2.50	25.00
2							10		25.00
	80	3.00	240.00	65	3.00	195.00	15	3.00	45.00
							25		70.00
3							25		70.00
	90	3.40	306.00	90	3.40	306.00	0	3.40	0.00
							25		70.00
4							25		70.00
	130	4.00	520.00	100	4.00	400.00	30	4.00	120.00
							55		190.00